Migration and Remittances in Senegal: Effects on Labor Supply and Human Capital of Households Members Left Behind Ameth Saloum Ndiaye UNU-WIDER 2017 Development Conference UNU-WIDER 2017 Development 1 Conference - Accra
Outline of discussion Motivation • The literature • This paper • Methodology • Results • Policy implications • UNU-WIDER 2017 Development 2 Conference - Accra
Motivation The phenomenon of international migration in Senegal has received • increased attention from the government and development partners. Several migration-related institutions were created: Ministry for • Senegalese living oversea, Directorate-General for Senegalese living oversea, Fonds d ’ Appui à l ’ Investissement des Sénégalais de l ’ Extérieur , Bureau d ’ Accueil, d ’ Orientation et de Suivi des Emigrés , and Haut Conseil des Sénégalais de l'Extérieur . The main concern of the government is to protect migrants and • promote remittances with a view to design relevant policies for a better contribution of migration and remittances flows for development, in terms of making remittances more oriented towards productive investment and the development of entrepreneurship. Some estimates indicate indeed that in Senegal only 11% of families • benefiting from remittances have used these resources to fund productive investments (African Development Bank, 2008). UNU-WIDER 2017 Development 3 Conference - Accra
Motivation (Cont ’ d) Senegal is among the top ten remittance-receiving countries in sub- • Saharan Africa: the country is placed third in absolute terms (Gupta et al., 2007). In the CFA Franc Zone, Senegal is placed first recipient country of • remittances in absolute terms (Ndiaye, 2010). Remittances in 2013 contributed about 11.2% of Senegal ’ s GDP , • equivalent to $1,652 million (World Bank, 2014). International migration in Senegal is mainly motivated by the • widespread need to address the unemployment problem and by the search for better living conditions (Goldsmith et al., 2004). • Migration thus appears to be one alternative for many young members of the Senegalese households who are faced with the problem of unemployment (Diène, 2012). UNU-WIDER 2017 Development 4 Conference - Accra
Motivation (Cont ’ d) Remittances are indeed seen as an important source of revenues for • migrants ’ families left behind (Mohapatra and Ratha, 2001) … … particularly as a useful and effective way of reducing poverty and • income inequality (Gupta et al., 2007; Chami et al., 2008; Roth and Tiberti, 2016) and of increasing consumption (Diagne and Diane, 2008; Bèye, 2009; Daffé, 2009). Therefore, migration and remittances could potentially play a role • in labor market participation and human capital development. On a negative side, migration and remittances, as a non-labor • source of revenue, could generate a state of dependence, thereby reducing the labor market participation of households left behind (Harris and Todaro, 1970; Borjas, 2006; Berker, 2011; Schumann, 2013; Ruhs and Vargas-Silva, 2014). UNU-WIDER 2017 Development 5 Conference - Accra
Motivation (End) On a positive side, remittances could contribute to improve human • capital of the left-behind for instance by helping them to have access to education and health services (Guilmoto and Sandron, 2003; Taylor and Mora, 2006; Özden and Schiff, 2006; Ben Mim and Mabrouk, 2011). Main message: This paper intends to understand how migration • and remittances influence labor market participation, and the implications of remittances for human capital development in Senegal. Why? Depending on whether the migrants living abroad have or • not a job, the left-behind households ’ members with migrants may thus receive no remittances or receive small or high levels. Due to this uncertainty in the connection between migration and remittances, it is important to investigate the effect of both migration and remittances on labor market participation of the left- behind members. UNU-WIDER 2017 Development 6 Conference - Accra
The literature The effects of migration and remittances on labor market participation • The impact of migration and remittances on labor market participation in the literature is mitigated, and empirical results were found to be conditional on gender issues, education, age, and labor market locations. • Gender issues: some studies found that migration reduces women labor market participation (Lokshin and Glinskaya, 2009; Démurger, 2015), while others found that migration increases labor market participation for women (Dermendzhieva, 2010; Binzel and Assaad, 2011). The labor supply response of women to increases in remittances were found to be positive (Amuedo-Dorantes and Pozo, 2012), but negative (Amuedo-Dorantes and Pozo, 2006; Lokshin and Glinskaya, 2009; Dermendzhieva, 2010). • Education issues: Schumann (2013) showed that the link between remittances and employment depends on the level of schooling: more highly educated individuals are more likely to be self-employed when they receive remittances. He found no evidence for the labor supply responses of lower educated individuals. UNU-WIDER 2017 Development 7 Conference - Accra
The literature (Cont ’ d) Age issues: Petreski et al. (2014) found that youth in households • receiving remittances have considerably larger probability of establishing their own business, compared to their non-youth non- receiving counterparts. Chen (2013) found that, when the father migrates without his family, children spend more time in household production, while mothers spend less time in both household production and income-generating activities. Labor market locations: migration induces a decrease in wage • work in rural and urban areas (Binzel and Assaad, 2011). Démurger and Li (2013) showed that in rural China, at the individual level, migration favors off-farm work, whereas at the family level, migration drives the left-behinds to farming rather than to off-farm activities. Madon (2008) found that, in urban labor market in Senegal, migrants couldn ’ t have an employment in the formal public sector and the formal private enterprises. Most of them can only enter into the informal sector for non-qualified employments. UNU-WIDER 2017 Development 8 Conference - Accra
The literature (End) The effect of remittances on human capital • Several studies have found a positive impact of remittances on human capital … • … for Latin American countries (Kanaiaupuni and Donato, 1999; Cox- Edwards and Ureta, 2003; Hanson and Woodruff, 2003; Lopez- Cordova, 2005; Hildebrandt and McKenzie, 2005; Amuedo-Dorantes and Pozo, 2006; Amuedo-Dorantes et al., 2007; Adams and Cuecuecha, 2010; Acosta, 2011) … • … for Asian countries (Yang and Martinez, 2006; Görlich et al., 2007; Yang, 2008; Bansak and Chezum, 2009; Painduri and Thangavelu, 2011) … • … for sub-Saharan African countries (Brockerhoff, 1990; Kifle, 2007; Gubert, 2009; Démurger, 2015) … • … and for a wider panel data (Gupta et al., 2007; Drabo and Ebeke, 2010; Ben Mim and Mabrouk, 2011; Zhunio et al., 2012). • Few empirical papers have found a negative effect of remittances on human capital (McKenzie, 2006 for Mexico; Painduri and Thangavelu, 2011 for Indonesia; Cattaneo, 2012 for Albania). UNU-WIDER 2017 Development 9 Conference - Accra
This paper The effect of international migration on local labor supply has not • been investigated for Senegal (Fall and Cissé, 2007). Also, only Schumann (2013) has explored the impact of remittances on labor supply for Senegal. But Schuman (2013) used only a binary specification of labor market • participation with a control for endogeneity and sample selection bias, whereas our study employs a set of econometric models. In exploring the effect of remittances on labor market, past studies • did not disaggregate the level of remittances. This paper uses various levels of remittances in order to explore • whether the labor market effect of remittances depends on the level of remittances and not only the status of receiving or not remittances. This paper uses a rich household and individual survey data to • analyze whether both migration and remittances generate positive or negative externalities in terms of labor market participation in Senegal. UNU-WIDER 2017 Development 10 Conference - Accra
This paper (Cont ’ d) A systematic econometric analysis of the effect of remittances on • human capital in Senegal, specifically on education and health, has not been undertaken. While previous studies focused on total consumption expenditures • of households (Diagne and Diané, 2008), we assess the differential effect of remittances on health and education expenditures. Also, to estimate the effect of remittances on human capital, past • studies did not consider segmentation by level of remittances. This paper considers both this decomposition and the status of • receiving or not remittances. UNU-WIDER 2017 Development 11 Conference - Accra
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